To clarify, according to the email we received, these questions have been grouped. Could the Leas-Cheann Comhairle explain the time allocations for us?
Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions
I did not know they were grouped.
It is very unusual.
Priority questions are not usually grouped.
From the email we got, it seems they are. I would be quite happy if they are not.
Yes, I would rather if they were not.
No priority questions have been grouped.
That is great.
I am sorry, the three are grouped.
No, they are not.
Priority questions cannot be grouped.
That is a long-standing practice.
35. Deputy Darragh O'Brien asked the Minister for Housing, Planning and Local Government the status of the next round of funding for the Rebuilding Ireland home loan scheme; if each local authority is still issuing loans; and if he will make a statement on the matter. [24050/19]
Eoin Ó BroinQuestion:
36. Deputy Eoin Ó Broin asked the Minister for Housing, Planning and Local Government the price range for affordable housing projects to be delivered under the serviced sites fund with respect to the various initiatives on affordable housing; the rents to be charged on the cost rental projects to be delivered in 2019 and 2020; and when a second tranche of funding will be provided to local authorities for the Rebuilding Ireland home loan scheme. [24274/19]
37. Deputy Darragh O'Brien asked the Minister for Housing, Planning and Local Government the status of the cost rental pilot project scheme; the timeframe for completion; and if he will make a statement on the matter. [24051/19]
Six weeks ago I asked a question about the position in respect of the Rebuilding Ireland affordable home loan. That affordability measure was the Minister's flagship, and only, measure with regard to affordability. What is the status of the next round of funding for that home loan measure? Is each and every local authority still issuing loans? Will the Minister provide an update on the status of the additional funding in respect of which he apparently has been in discussions with the Departments of Finance and Public Expenditure and Reform?
Three questions have been grouped and the answers will be given together. I will give everyone ample opportunity.
We can have 18 minutes.
As long as we all-----
It is all the same if they are all happening together.
The Deputies will not be deprived. The Minister will answer and then we will go around the House.
Tar éis sin will I get to ask my other question? Are the three being grouped?
The Deputy will get two supplementary questions, as will Deputy Ó Broin. We will be as generous as possible. The Minister has a long reply.
He should have. This requires a detailed explanation.
For clarity, I was informed that the three priority questions had been grouped so my answer covers the first three.
That is okay, we will take them that way.
I propose to take Questions Nos. 35 to 37, inclusive, together.
When the Rebuilding Ireland home loan was initially being developed, it was estimated that the drawdown of loans under the scheme would be approximately €200 million over three years. From the data collated on the scheme to date, the home loan has proven to be more successful than initially anticipated. The Housing Agency, which provides a central support service to assess loan applications, has confirmed that up to the end of May 2019, 4,193 applications have been assessed, of which 2,153, or 51%, have been recommended for approval. The latest information available from local authorities indicates that 823 loans, totalling some €139.9 million, had been drawn down at the end of March 2019.
As a result of this very significant level of activity, the scheme requires a further tranche of funds to be borrowed by the Housing Finance Agency in order to enable its continuation. My Department is currently in discussions with the Departments of Public Expenditure and Reform and Finance with regard to this amount, which I anticipate will be finalised very soon. When these discussions are concluded, I will be in a position to make an announcement on the matter. Ahead of such an announcement, the operation of the scheme is not affected. The scheme remains open and all local authorities have been advised to continue to receive and process applications up to and including the issuing of loans.
The delivery of affordable housing remains a key priority for the Government. To support the delivery of 6,200 affordable homes, €310 million is being made available under the serviced sites fund from 2019 to 2021, to facilitate the delivery of infrastructure on local authority sites. Last December, €43 million was approved under the fund for ten infrastructure projects in Dublin and Cork, which will deliver 1,400 affordable homes. Under the second serviced sites fund call, 30 submissions have been received from 15 local authorities. These are currently being assessed and I expect to issue approvals under this second call in the coming weeks.
The serviced sites fund will also play an important role in making cost rental projects as affordable as possible. Two pathfinder pilot projects are currently being progressed in order to facilitate the development of the cost rental model. These pilot projects are at Enniskerry Road, Stepaside, and at St. Michael’s Estate, Inchicore, both of which will inform further the development of a cost rental model for the Irish context.
The Enniskerry Road project comprises 155 homes, 50 of which will be cost rental. Funding of €4.5 million under the serviced sites fund is being made available to this project and construction is due to commence later this month, with completion of the homes scheduled for 2021.
The St. Michael’s Estate project is estimated to have the potential to accommodate more than 470 social and cost rental homes in a high quality development. Dublin City Council has appointed a dedicated project manager and a project team to move this development forward and professional advisers have also been appointed to develop an urban design framework plan for the site. This is a key project and my Department is currently working closely with the council with a view to accelerating the delivery of much needed cost rental homes and community facilities in the area.
The price of individual homes, or the reductions on market rents, to be delivered with the support of the serviced sites fund will be determined on a project-by-project basis. Part 5 of the Housing (Miscellaneous Provisions) Act 2009, which was commenced last June, provides for a discount of up to 40% on the market value of affordable homes for purchase, with the discount being held as an equity stake by the local authority until it is repaid by the household or captured on resale.
These new schemes are set in the context of moderating growth in house prices and rental levels in the market and will complement other key Government affordability initiatives. These include the Rebuilding Ireland home loan, which I referred to earlier, and the help-to-buy scheme, under which some 11,500 applications, to a value of some €169 million, have been approved.
In addition, approximately 2,350 affordable homes will be delivered on mainly publicly owned lands supported through the local infrastructure housing activation fund, LIHAF, while 5,600 further homes will benefit from a LIHAF-related cost reduction, some of which are already coming to market. The work of the Land Development Agency will also be of crucial importance in terms of delivering more affordable housing. The initial portfolio of sites to which the agency has access will have the potential, over the short to medium term, to deliver 3,000 affordable homes in line with the Government policy of achieving 30% affordable housing on State lands generally.
Taken together, programmes are in place under which nearly 18,000 affordable homes or homes with a LIHAF-related reduction will be delivered, with over 12,200 households also supported through the Rebuilding Ireland home loan or the help-to-buy scheme.
For the record, both of my priority questions have been grouped and they are on two very different things.
The Minister has been able to get away with an omnibus answer, covering everything and not dealing with any specifics of the questions asked.
The Deputy is getting the opportunity-----
For the purpose of priority questions into the future, I respectfully say by way of feedback-----
We will have a look at that.
-----if you understand the point I am making-----
I would rather if the Minister came here today and said he does not know what is happening. That is basically what he has been saying in recent weeks. He says he is discussing it with the Departments of Finance, and Public Expenditure and Reform. He is saying there is no change to the scheme and that nobody is affected. That is all nonsense and untrue. Thousands of people do not know what is happening with their mortgage applications. Local authorities such as Kildare County Council and others are not granting or approving loans because they have not got their allocations for 2019.
I remind the Minister that we are now in June 2019. We found out about this through a freedom of information request and not through any response the Minister gave in the House. It had to be dragged out of the Department of Housing, Planning and Local Government. Since March or April the Minister has come into the House and talked nonsense about the issue. He is saying it is being discussed and that it is going to be resolved very soon. It is the same answer he gave me six weeks ago and it is not acceptable. Obviously, either he does not know what is going on or he is not willing to tell the House what is happening. When will the allocation be given? Will the Department of Finance give approval for the continuation of the Rebuilding Ireland affordable loan or not?
I have questions on cost rental as well-----
The Deputy will have an opportunity.
-----which I have not been able to ask. This is a simple question. When?
I call the Minister to respond to that specific question.
I was informed that the grouping of questions was in order. Two weeks ago in the committee we discussed all these issues for about three or four hours.
This is the Dáil Chamber.
I am happy to stay in the Dáil Chamber for as long as the Deputy wants to come back and answer every question-----
I am saying-----
We must have some order.
------just so long as the Deputy does not mislead the House.
I have not misled the House once.
The Minister to respond.
I would rather if the Minister gave a proper answer.
I will move on. I have no difficulty.
Deputy Eoghan Murphy is the Minister for Housing, Planning and Local Government and he should know what is going on.
I remind the Deputy that there has to be some order in the House. The Minister to continue.
After 14 months of this scheme being in operation, €140 million has been drawn down from €200 million.
I got that.
The fund has not been exhausted yet. That is why I entered in-----
I will move on to Deputy Ó Broin now. Whether the Deputy likes the answers or not-----
If I am going to be interrupted, I cannot-----
I am going to move on to the next question unless there is some-----
Allow the Minister to respond. The Deputy got his opportunity to ask his questions and nobody interrupted him. I will be fair to everybody on all sides of the House.
Tá brón orm.
Some €140 million has been drawn down to date and €200 million is available in the first tranche. I entered into early discussions with the Department of Finance to ensure funding would be available for a second tranche when it is needed. However, it is not yet needed because the allocations have not run out.
In March the Department issued a circular informing local authorities to continue to process loans and issue loans despite the approvals that have gone through. If we identified any issues with local authorities indicating that was not happening, we contacted them directly. The scheme's continued operation is not dependent on me announcing the additional amount that will come in the second tranche. There will be an additional amount as I have previously confirmed. We will honour all loans that have been approved. I have said that. At the moment discussions are happening with the Department of Public Expenditure and Reform as to the amount of that second tranche. That is not impeding the issuing of loans and all loans approved to date will be honoured.
I repeat that of €200 million in the first tranche, only €140 million has been drawn down to date. There are still ample funds in the Rebuilding Ireland home loan scheme for those approvals already given. We are debating a second tranche of funding that will come to follow after the first tranche has been drawn down.
I take it the Minister has said that the next tranche will be announced when the €200 million has been expended, effectively. The Minister is telling me that he will wait for another €60 million to be drawn down before we get an answer and we know the size of the next tranche of funding. I understand that. The Minister has said here repeatedly that all loans will be honoured. The experience of many people in many different local authorities is the opposite of what the Minister has stated. Kildare County Council has been returning applications indicating it cannot go to the final stage of the loan, the drawdown, because it does not have its allocation for this year. It is as simple as that. While the Minister says €60 million is left, how many local authorities have expended their allocations?
I allow the Minister the latitude to outline this even in the broadest possible timeline he could give. Are we expecting these ongoing discussions between his Department and the Departments of Finance and Public Expenditure and Reform to continue for another six, 12 or 18 months? Will we get some clarity on this at long last or do we have to submit further freedom of information requests to the Department of Housing, Planning and Local Government and the Department of Public Expenditure and Reform to get to the truth of the matter?
I am not waiting for the fund to run out, which is why I have had this early engagement with the Minister for Public Expenditure and Reform to get a second tranche of funds. I engaged early on that basis, noting that the first tranche has not even been drawn down yet. Local authorities are also not waiting and that is why the circular was issued and contacts have been made.
The additional money is significant. I hope it will be finalised this week, but I need to be prudent with the public finances and I also need to be prudent with how the local authorities manage their finances. That is why we are taking care and time with this, as is appropriate. It is not impacting on local authorities approving loans. Today we are publishing details of the Rebuilding Ireland home loan approvals and drawdowns by each local authority in the first quarter of this year. This continues to be in operation. Local authorities do not need to wait for me to announce this figure. They are not waiting for additional allocations because they have been told to process and approve loans and let them go to drawdown. The data published today will show that has been happening. We will announce a further amount of money that will allow the scheme to continue because it has proved to be so successful.
I have questions on each of the three schemes. The first is on the Rebuilding Ireland home loan scheme. I have listened very carefully to what the Minister has said. Some local authorities currently are not accepting or processing new applications. I accept the circular has been issued, but it might be useful if the Department contacted local authorities to ascertain which are and which are not because there is considerable confusion. My local authority, South Dublin County Council, currently is not accepting new applications.
With respect to the affordable home purchase scheme, some recent newspaper coverage suggested that three serviced sites fund projects in Dublin could have sale prices of between €116,000 and €233,000 for those developments. That would be good news if that is the case. Will the Minister confirm if that is his understanding?
I again express concern over the entry level rents for the cost rental pilot in Enniskerry Road in the Dún Laoghaire-Rathdown County Council area. To cover €1,200 a month would require a net income of €4,000 a month for it to be genuinely affordable under, for example, the criteria the ESRI uses of 30% of net disposable income. Will the Minister look at that again to see if that entry-level rent can be reduced to a genuinely affordable level?
The Deputy is correct. The circular issued to local authorities in March, informing them that they could continue to process and approve loans, and that those loans could be drawn down. That came as a result of my commitment to the Oireachtas and the public that any loan approved would be honoured. At the previous meeting of the Oireachtas Joint Committee on Housing, Planning and Local Government the Deputy said some local authorities were not doing that. He referenced his own local authority. Since then, it has been contacted about that. I thank him for bringing that to my attention.
Some interesting things are now happening on the serviced sites fund because of the work we have been able to do in the past year or so. As the Deputy knows, we commenced Part V last year. We have the regulations on the scheme, which we all discussed at the committee, approved in March. The first call was in June last year and it was approved in December. There are ten projects in Dublin and Cork comprising 1,400 homes with €43 million of Exchequer funding. For example, in the Ballymun site a two-bedroom home is €150,000 after the discount that would be held as an equity stake by the local authority, and in Ballyfermot a three-bedroom home is €240,000, which is very welcome.
Significant work is happening on cost rental. We have officially engaged the European Investment bank, EIB, to act as an adviser on how we can achieve cost rental that works at the entry level. The National Development Finance Agency, NDFA, has also done financial modelling on this. I have engaged with one of the housing bodies on this site to ensure the entry-level rents we are discussing are below market levels. The key thing about cost rental is that while it might start off at 15% to 25% below market value, over time that increases to up to 40% below market value.
Cost rental needs to be affordable based on the tenants' income. Comparing entry-level rent with market rent is not the right metric. That is why we use a metric such as the ESRI's 30% of net disposable income. The problem is that the rent for the homes on Enniskerry Road will be €1,200 per month, meaning a household will need a net disposable income of €4,000, which is considerably above the income of many households required for this. In real terms - St. Michael's estate in Inchicore is a good example of this - we need entry-level rents of between €700 and €900 a month to meet the need of those whose household income is between €40,000 and €70,000.
That is what is done in other cities. They construct the finances in a different way than what is proposed for Enniskerry Road. I urge the Minister to re-examine this. Otherwise a large group of households that today cannot gain access to social housing will not be able to afford the rents, either on Enniskerry Road or in Saint Michael's Estate, if it follows what is happening in Dún Laoghaire-Rathdown. That would be a mistake given the importance of the two initial cost rental projects.
I accept that point completely in terms of making sure the rents are actually affordable for the people at whom the solutions or apartments are aimed. We have a new working group on cost rental in the Department now. I have the European Investment Bank agreement, as I have said. It was signed in May. The agreement states the bank will provide advisory services. The NDFA has done its own financial modelling.
In regard to Enniskerry Road, there are a number of different actors involved, from the Housing Agency and the Housing Finance Agency to my Department and the county council, as well as Tuath and Respond. I am aware of the challenge that exists and certain requests that have been put to the State actors involved regarding the changes they could make that could make the rents even more affordable. They are being considered.
With regard to Saint Michael's Estate, obviously because it is a larger project there is a bigger scale. We will be considering quite a significant amount of European Investment Bank financing in that regard. Hence, we have taken it on as our adviser to make sure we can make real the projections the NDFA modelled in terms of the funding and the price at which it comes. I take the Deputy's point completely and that is why we continue to engage with those involved, particularly in Enniskerry Road. It is now why we have the working group established in the Department.
On cost rental, in particular, I wish to follow on from Deputy Ó Broin. The Minister will know that the fourth quarter daft.ie report has shown that in Dublin, it is approximately 89% more expensive to rent than to purchase a home if one is able to get a mortgage. In some areas, it is three times more expensive to rent. That is why cost rental is important.
With regard to St. Michael's Estate specifically, there was a public announcement that I welcomed on progressing the work on the estate with the agreement of residents and the campaign group. My colleague, Senator Ardagh, has been heavily involved with residents. What is now happening with St. Michael's Estate? Has the Minister a timeline for the completion of the initial phase in the estate? There seems to be some frustration on the ground based on the view that very little has happened or that there has been very little engagement with residents since the announcement the Minister made. Is there any truth in the rumour that there has been a change in the Minister's policy and position on St. Michael's Estate due to the intervention of the Minister of State, Deputy Catherine Byrne. Is the Minister still committed to the cost rental model at St. Michael's Estate? What is the timeframe now? What can we say to residents in the area regarding what is happening at St. Michael's, Inchicore?
I thank the Deputy for his follow-up question. When one looks at the rental information we have and the rent index produced by the Residential Tenancies Board, it is crazy that in many parts, particularly the capital city but also in Cork, someone's rent might be more expensive than a mortgage. That is why we brought through, as quickly as we could, the recent rent Bill to moderate rents even further and to extend rent pressure zones. It is also why we have other initiatives to help people to put together a deposit for a home and help people to buy, including the Rebuilding Ireland home loan. The Deputy will be aware of all the schemes now in place for supporting home ownership.
On St. Michael's Estate, my commitment has not changed at all. It has not changed in regard to the vision we have for cost rental there. The Deputy mentioned his colleague, Senator Ardagh. I am not clear she supports the project because it was not clear when she turned up at the event we held. There has been a significant engagement with the local residents. They are in no doubt about how matters are progressing.
Dublin City Council has appointed a project manager for the St. Michael's site. There is an Inchicore regeneration consultative forum. We have appointed professionals for the design aspect of the site. We have also appointed Mr. Jack Nolan to carry out a wider scoping exercise for the area. We have meetings under way with the European Investment Bank, as I have mentioned, and I have been out of the site on a number of occasions to meet local stakeholders and local community representatives, as well as to look at some of the ancillary things we need to do on the site in so far as the community is concerned. It is a question of making sure that, as we build all these great new homes and bring in all the people to live in them, there are appropriate facilities.
38. Deputy Mick Barry asked the Minister for Housing, Planning and Local Government his views on the minimum guidelines for dormitory space and for cubicles and the shared kitchen ratio for co-living arrangements. [24035/19]
The next question is being taken by Deputy Coppinger, who has 30 seconds to introduce it.
While I acknowledge the Minister has been asked about this incessantly, the public is still very interested in where the Minister got the exciting concept of co-living. Just how small do the units have to be? Could the Minister comment on yesterday's very detailed evidence that the proposal would actually be a disaster for those facing a housing crisis because it would push up the price of land and veer developers in this direction?
I thank the Deputy for the question. In 2018, I published updated Sustainable Urban Housing: Design Standards for New Apartments Guidelines for Planning Authorities under section 28 of the Planning and Development Act 2000, as amended. The guidelines propose one possible format for shared accommodation or co-living units comprising two to six bedrooms, including en suites, those bedrooms being larger than standard bedroom sizes, with a common shared area for living and kitchen facilities, which would have a maximum occupancy of eight people. While the guidelines do acknowledge that other formats may be proposed for consideration by individual planning authorities in certain circumstances, the articulated format is a strong guide to what is expected from this emerging sector.
In assessing proposals, planning authorities are required to ensure that sufficient communal amenities are provided in accordance with the specified standards and that the scale of the development is appropriate to the location and buildings involved. They must also be cognisant of the specific role that the development of the shared accommodation sector should play in the wider urban apartment market.
It is important to note the guidelines were the subject of more than five weeks of public consultation, following the issuing of draft guidelines on 18 December 2017. Neither the Deputy nor her party availed of the opportunity to make a submission as part of this consultation. The guidelines were finalised on 9 March 2018 and were broadly welcomed by the Royal Institute of the Architects of Ireland, with the institute's president commenting that the "new guidelines respond to our changing demographics and create four specific types of apartments which will allow for better housing mix: Build to Rent, Shared Living, Owner Occupier and Student Accommodation". Furthermore, he stated the new approach should:
see the sector innovate to respond to the changing market. Two thirds of new households in Ireland over the past twenty years consist of one or two people, yet we are not building enough apartments to cater for this new demographic. At present there are 2.5 times as many one- and two-person households as there are homes to suit them.
While I am satisfied that the guidelines, as issued, are robust, given the relatively new nature of this form of accommodation, my Department will monitor the emerging shared accommodation sector and may issue further additional technical updates, as appropriate, to ensure the appropriate development of this form of accommodation.
I am not going to spend too much time dealing with the fact that it is clear most people do not want to live in a dog box, which is what the Minister is proposing, but I ask him to comment on yesterday's revelations by Mel Reynolds, the architect and housing analyst. He made the excellent point that there are some people in Dublin getting very excited about co-living, namely, the developers. It just stands to reason that if one owns land that is lying vacant right now, one will apply to build co-living units, just like the student accommodation that is flying up all around Dublin and other cities. Many people thought there was a tax incentive for this but there is not. It just makes perfect sense: yield equals value for developers.
Under the co-living arrangement the Minister is talking about, five co-living bedrooms can fit in a site the same size as a typical two-bedroom apartment. Those in one and two-person households do not want to live in co-living arrangements in modern tenements.
More than a year ago, the new guidelines came into force. The Deputy and her party did not participate in the public consultation that was held at the time. According to the logic of the article published yesterday and to which the Deputy referred, which is that allowing for more units on a site will drive up the cost of that site, one would build only one unit of accommodation per site regardless of the size of the site or demand in the area. Therefore, the logic behind the article is essentially flawed.
What we are trying to do is cater to a very small part of the market. The demand is small but there is still demand. If over the next 12 months, 1% of new builds in this country provide for co-living, it will take between 200 and 250 people. That will free up potentially 100 to 125 apartments in the same area. That is how we provide choice. That is how we make sure the various needs in society can be met. At present, people do not have choice. That is the real crisis we are trying to address. We are not trying to replace the traditional apartment; nothing like it. We are trying to add an additional layer to what is being built because there is a demand for it. We know this from the other cities we are trying to emulate. I refer to their stable rental sectors, cost rental models and more compact growth. It is a matter of making sure we are cognisant of our climate obligations in terms of how and where we build. Co-living can be part of that, in terms of shared accommodation and what some people might choose to live in.
People know that property developers are not social workers and are only concerned about profit. They will go for whatever yields the most profit. Property developers are business people. They want to get the best possible return for themselves and their shareholders and that is a logic with which the Minister agrees. The Minister is leaving housing in the hands of private developers and private landlords by not intervening and he has handed them a gift on a plate.
People who live in Dublin and other cities will have noticed that student apartments are flying up. Of course we need student apartments but we also need homes for families and single people. Student apartments are proliferating and using up vital inner city land because of the yields and returns available. The project in Dún Laoghaire is a perfect example of fitting five units, rather than a two-bedroom unit, into a space.
These co-living units are not very different to bedsits. They have bathrooms but very few kitchens, no balconies or parking and crucially there is no obligation to provide the legally mandated 10% social housing that other developers must provide.
Co-living is an attempt to provide a choice and an option for people. The bedrooms are en suite and larger than traditional bedrooms. These units are not for families nor are they social housing. There is no evidence that this sector is exploding in the way the Deputy thinks it is. It is approximately 14 months since these guidelines were published.
Student accommodation has exploded.
I am talking about co-living which is the question the Deputy asked. There is no evidence that co-living has exploded in the way she says it has over the past 14 months. Of course, because it is new, we will keep it under review and ensure the guidelines are robustly enforced. The fact of the matter is that we must provide homes for everyone. Student accommodation takes pressure off other parts of the rental sector. If four students are in student accommodation instead of sharing a house, that house is available for a family to rent or for adults to share.
In the course of 2019, between 21,000 and 23,000 houses will be built and other homes will be added to the housing stock through the finishing of unfinished housing estates and other houses being taken out of long-term vacancy. Through providing homes, apartments, student accommodation and approximately 1% of co-living units, we will take the pressure off many families and individuals who do not have the kinds of choices they need in order to find a house they can afford to live in which is close to their work or family. The central objective under Rebuilding Ireland is to increase supply and, as that happens, to increase choice.
Defective Building Materials
39. Deputy Thomas Pringle asked the Minister for Housing, Planning and Local Government the justification for allocating €20 million in funding for homeowners affected by MICA in County Donegal as part of the MICA redress scheme; his views on whether €20 million is sufficient to address the outstanding structural issues facing homeowners due to MICA; if further funding will be allocated to ensure there is no funding shortfall for any family in need; and if he will make a statement on the matter. [23872/19]
I am seeking clarification as to how the Government came up with the figure of €20 million for the mica redress scheme and whether the figure is sufficient to address the housing needs of all those affected. Was this tokenistic, given that it was announced during local elections? Anyone can tell the Government that €20 million is insufficient. An estimated 4,600 homes, most of which are in County Donegal, are affected by mica. Taking that into account, a large portion of those are not even taking up the scheme. It is good news that the scheme will be delivered but how will the funds be made available and will those funds meet the redress needs of all those affected?
In October 2018, the Government approved in principle the development of a grant scheme of financial assistance to support affected homeowners in counties Donegal and Mayo to carry out the necessary remediation works to dwellings that have been damaged due to defective concrete blocks. This followed on from the work carried out by the expert panel on concrete blocks established by my Department in 2016.
Last month, agreement was reached with the Minister for Public Expenditure and Reform to allocate €20 million to a scheme for this purpose from within the €2.4 billion housing budget for 2019. The full terms and conditions of the scheme will be finalised over the coming weeks, again in consultation with the Minister for Public Expenditure and Reform. This process will take account of the engagement that my Department is currently having with both Donegal and Mayo County Councils on the arrangements for the scheme. On completion of this work, it is intended to revert to Government on the matter.
The ultimate costs of the scheme will be determined by the scheme's final agreed terms and conditions and will, of course, also depend on the number of applications made under the scheme and the extent of the damage to be remediated in each individual house ultimately approved for grant assistance. The €20 million earmarked for the scheme in 2019 is an initial allocation to support its early phase of operation. Funding for future years will be agreed on an annual basis as part of the normal Estimates process.
As the Deputy is aware, I have met regularly with the mica action group over the past couple of years. We have talked through this process on numerous occasions and I always explained that, similar to the pyrite scheme, there will be an initial allocation of money to get the scheme up and running and to deal with houses deserving of priority. Further money will be drawn down as the years progress. That is exactly what is happening.
Nobody is saying that €20 million will fix all the houses. We wish it would, but we know, as does the Deputy, that it will not. Every house will cost a different amount to fix based on the standard protocol and an engineer's assessment and agreement and we will work through that. The scheme will need additional funding and that is part of the process and those funds will be drawn down in the time ahead.
We are sincerely committed to this scheme. This was not just a local election issue, it was announced last October. The people with whom we dealt on a regular basis needed to know, once and for all, could a scheme be done and we told those people it could last October. They accepted it would take a little time to bring the scheme forward.
I thank the Minister of State for his response. The scheme has been announced but its terms and conditions have not yet been finalised. When can people expect the actual work to be carried out on their houses? That will be significant because the houses are deteriorating further as time drags on so it will end up costing more. When will actual work start? It seems as if there are still many procedural issues to be sorted out. It could easily be this time next year before any work has actually been carried out on the ground and no one wants that.
The Deputy asks a fair question. We told the mica action group when we last met in Donegal that we had a target of this July to start fixing houses. It looks now as if that will not happen until the autumn. I do not see any reason why we cannot work out all the procedures and start fixing houses then.
There have been a couple of meetings between Mayo and Donegal County Councils and officials from the Department since we announced the clarification. All sides have agreed to move this as quickly as we possibly can because, naturally, we all want to step in and start fixing houses. I see no reason why the procedures and all the rest of it cannot be put to bed in the weeks ahead and it will be for the Government then to give the final sign-off. We should be able to fix houses in the autumn. I put my hands up and admit that is a number of months later than we anticipated when I formally met the group in Donegal most recently. At that time, we were hoping to start work in June or July. It now looks like it will start in the autumn. Hopefully we will start then and we can move on.
What about people who cannot afford the balance of the cost of remediation works? I understand that the scheme will pick up 90% of the cost but what about people who cannot afford to bridge the gap? Will the scheme accommodate those people? Is the order in which houses will be remediated to be based on the deterioration of the house rather than whether someone can afford to deal with it or not? That will be critical. People have already paid a lot of money and may not be able to afford the balance of the cost of remediation.
Deputy Pringle will understand that the scheme is not yet fully finalised; that will happen in the weeks ahead. Those who are most in need will be helped first and that is the logical way to approach this. We have been in some of these houses and we know how bad they are. The full cost of remediation works will not be met under the scheme but Donegal and Mayo local authorities said they will work with the Department to try and ensure this option will suit most people. We will try and deal with it when the scheme is finalised in the weeks ahead. We recognise the issues and have chosen this form of scheme to get started as quickly as possible. The Minister and I gave a commitment to develop a scheme that would start fixing houses as quickly as possible and that is what we are trying to do.